Trump’s Trade ‘Hammer’ Aims to Pound China, Mexico and the WTO
Andrew Mayeda, Bill Allison
The trade talks on steel imports were dragging on, and Robert Lighthizer didn’t care for the Japanese offer. So he folded it into a paper airplane and launched it across his desk at Japan’s lead negotiator.
Within days, the Japanese agreed to cut their nation’s share of the U.S. steel market, a key piece of then-President Ronald Reagan’s plan to curb foreign steel imports. The 1985 deal capped weeks of negotiations in which Lighthizer, then the deputy U.S. Trade Representative, shocked his Japanese counterparts with rough-hewn jokes and wore them out with his disdain for their proposals, former colleagues recalled. During one Japanese presentation, he devoted his attention to playfully disassembling his microphone.
Now, Lighthizer, 69, has been handed a megaphone. He’s preparing to take over as top trade negotiator for a president who argues that the true roots of Republicanism lie in the protectionist bent of such early leaders as Abraham Lincoln.
Donald Trump has promised a tough new approach to trade that will shield American workers and companies, even if that means slapping tariffs on foreign goods and ignoring decisions made by the World Trade Organization.
“He’ll be the hammer,” said Bill Perry, a partner at law firm Harris Bricken who was hired by Lighthizer at the USTR office in the 1980s. “He’ll be an extremely tough negotiator. And for free traders, he’ll be their best hope, because he understands the limits of the law.”
NAFTA and China
At the top of Lighthizer’s agenda will be renegotiating the North American Free Trade Agreement. The original talks for that 1993 pact took two years; the Trump administration wants a new deal in half that time. Regarding China, which accounts for more than half of America’s $500-billion trade deficit, Lighthizer has
urged a harder-nosed approach and more trade complaints from the U.S. More fundamentally, he’ll be
tasked with overhauling the way the U.S. manages its trade with the world, based on Trump’s assertion that while free trade is good, the current system hasn’t delivered it.
Matthew Nolan, an attorney with Arent Fox LLP, calls Lighthizer “an aggressive lawyer” who may believe Trump’s election gives him fresh license for taking tough positions. “I don’t think he will feel constrained by any current or past limitations,” said Nolan, who has represented the governments of Canada and Mexico in trade disputes. “I think everything’s going to be on the table.”
Some economists worry about the potential results. “Consumers buy a lot of things from China, and the immediate impact of a higher tariff on Chinese goods would be increased prices,” said Chad Bown, senior fellow at Peterson Institute for International Economics. Aggressive U.S. policies risk igniting international trade wars, Bown said. “China will retaliate,” he said. “And if you’re a worker or a farmer whose livelihood is tied up in your ability to sell your product to China, you’re also going to be hurt.”
